Affiliation rules muddy small business contracting waters

By Mark Rockwell

Nov 15, 2013

Members of the House Small Business and Veterans Affairs committees are pushing for new procurement legislation in the wake of unflattering revelations about the Veterans Affairs Department's contracting certification processes.

Spurred by a lengthy report in the Washington Post the week of Nov. 11, House Small Business Chairman Sam Graves (R-Mo.), Veterans Affairs Chairman Jeff Miller (R-Fla.), Rep. Richard Hanna (R-N.Y.) and Rep Mike Coffman (R-Colo.) said in a joint statement that they were looking into whether the firm highlighted in the Post series – Vienna, Va.-based MicroTech -- was evaluated correctly under federal small business rules.

Some federal acquisition experts said lawmakers should focus less on how to define a small business and more on the rules used to regulate associations between contractors.

Handing a job to a small business that then subcontracts out the work to a larger company might be within the bounds of the rules in many cases, but some argue that such behavior violates the spirit of – and purpose behind – small business set-asides.

The Post reported that MicroTech had close ties to MicroLink -- a firm operating in the same Tysons Corner, Va., office building, but which did not have a small business designation.

It has been only two years since the federal government revamped its criteria for what constitutes a small business, said Larry Allen, president of Allen Federal Business Partners. Rather than taking another swing at that, Allen suggested, the federal government instead should address the often Byzantine "affiliation rules" at issue in the MicroTech case.

Graves said his panel is looking into whether the VA inspector general is investigating possible subcontracting violations. "The VA does a lot of good things, but determining if a firm is a small business is not one of them," Graves said in the Nov. 14 statement.

Graves, Miller and Hanna back legislation introduced by Coffman that aims to boost the contracting prospects of small businesses owned by disabled veterans by standardizing the way the Small Business Administration and the VA define a small business and transferring the VA's verification responsibilities to the SBA.

"VA should be leading the way when it comes to compliance with federal service-disabled veteran-owned small business contracting rules," said Miller, who added that the Post report highlighted "a shining example of what not to do."

About the Author

Mark Rockwell is a staff writer at FCW.

Before joining FCW, Rockwell was Washington correspondent for Government Security News, where he covered all aspects of homeland security from IT to detection dogs and border security. Over the last 25 years in Washington as a reporter, editor and correspondent, he has covered an increasingly wide array of high-tech issues for publications like Communications Week, Internet Week, Fiber Optics News, tele.com magazine and Wireless Week.

Rockwell received a Jesse H. Neal Award for his work covering telecommunications issues, and is a graduate of James Madison University.

Reader comments

Wed, Nov 20, 2013
Cleve Pillifant
Northern Virginia

Perhaps the real implication of this report is that legislators and regulators need to be more aware of what they are writing into the law or regs. MicroTech apparently did not violate any laws or regulations, they merely used the flexibility (critics mights say loopholes!) in existing laws and regulations to achieve a favorable outcome for themselves. I haven't heard how the services provided to the government under these arrangements was anything less than satisfactory. Shouldn't that count for something?

Tue, Nov 19, 2013
OccupyIT

As usual good contractors will be penalized for the actions of bad contractors, or worse yet, bad contractors colluding with bad govies. The whipping boy mentality of of all regulatory response is sad and predictable. "The prince stole money from the treasury! What shall we do?" "Beat the commoner over there, of course?" "What about the official that handed the prince the key?" "What official?"

Mon, Nov 18, 2013

The Washington Post articles were not accurate nothing was mentioned to show how VA or the companies had violated any laws, regulations or the intent of the law!! So now CONGRESS wants to destroy the Service Disabled Veteran Small Business Program.

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